After years of promising, the IRS finally enabled taxpayers download their IRS transcripts.
In the past, the only options were to order transcripts via mail (2-week wait), walk into an IRS office, or pay a tax professional like myself to access your transcripts online. Now you can do it yourself, in your PJs, for free. This is very convenient for you, but unfortunately it is also very convenient for identity thieves. Oh well, price of progress.
The new IRS online transcript system is fairly straightforward, however not without bugs. Hopefully it will be fixed soon. The only confusing part is to know which transcript to order, so let me help.
- Tax Return Transcript. It is an abbreviated (meaning – incomplete) version of a tax return that you already filed. If you lost your copy of the actual tax return, then this transcript is somewhat helpful: it will give you the most important numbers, but it will miss a lot of details. If you have your own copy of the tax forms, then this transcript is not needed.
- Tax Account Transcript. It shows dates when your tax return and your tax extension were received by the IRS. It shows payments you made and refunds issued to you. It shows penalties, interest, and IRS notices sent to you. If you’re in collection, this transcript shows how bad it is. In other words, it is very helpful when you have some kind of issues with the IRS. If you’re fair and square with the IRS, this transcript will be short and sweet, showing zeroes.
- Record of Account. This is simply a combination of the first two transcripts. Not sure why the IRS had to make it a separate option.
- Wage and Income. This is probably the most helpful transcript of all. It shows you all your W2s, 1099s, 1098s, and other forms that are frequently misplaced. One big problem: this transcript is not available until late summer, simply because it has to wait until all these forms get reported to the IRS. Accordingly, if you want to use this transcript for tax preparation, you have to file for an extension and work on your tax return later in the year. This transcript is especially helpful if you received an IRS notice about something missing on your old tax returns.
Like all IRS communication, their transcripts can be difficult to understand, especially the Account Transcript when you have some IRS issues. This is where a competent tax professional comes in.